Forex, money bills won't harm economy, assures Sinha; LS nods

The Lok Sabha today passed by a voice vote
the Foreign Exchange Management Bill or FEMA and the Prevention of
Money Laundering Bill after an assurance by Finance Minister
Yashwant Sinha that India would continue to follow a cautious policy
on the management of foreign exchange.

The bills were discussed and passed jointly in a two-hour
discussion, with Sinha asserting that while FEMA was more liberal
and in tune with the country's requirement of liberalisation and
globalisation, money laundering was a stringent legislation which
would take care of more heinous crimes.

The two bills seek to replace the "draconian" Foreign Exchange Regulation Act.

Sinha said that India's foreign exchange reserves were stable
and large and had not been threatened even when the South Asian
crisis had been at its peak. The foreign institutional investors had
only withdrawn $ 500 million as compared to the foreign
exchange reserves of $ 9 billion.

Therefore, liberalisation with the enactment of FEMA was only
aimed at making the law humane and practical, and there was no
question of any large outflow of foreign exchange on this account.

The minister brushed aside contentions that while some provisions
of the bills were clear, others were ambiguous. Therefore, the
bills should be gone into greater depth as there was fear of the
courts striking down some of the provisions.

The standing committee on finance of the 12th Lok Sabha had
gone into the details of the Money Laundering Bill and all details
had been looked into. However, the bill could not be passed then
because of the dissolution of the Lok Sabha.

On a specific question by Pawan Kumar Bansal of the Congress that
legal practitioners could represent an accused, Sinha said this
provision had been included along with chartered accountants and
company secretaries, as far as the prevention of money laundering
bill was concerned.

He said significant changes have taken place with the
liberalisation of the economy and in the international money regime.

The bill also seeks to relax the conditions prescribed for grant
of bail so that the court may grant bail to persons below 16
years of age, women and sick or infirm people. Provisions have also
been made in the procedure for attachment and confiscation of
property so as to facilitate the transfer of funds involved in
money-laundering kept outside the country, and extradition of
accused persons from abroad.

Speaking on the bills, members generally said that there was
a need for stringent steps to check the flow of black money. However,
Bansal said that there were several loopholes in the bills
presented in the house. He said the PML Bill did not cover crimes
committed with modern gadgetry like the Internet, which did not
require the criminal to be present when the crime was committed.

Similarly, property dealers who were among the biggest defaulters,
were not covered. He said the provisions for attachment of property
should apply even in the case of those suspected of money laundering
and not merely when charged with the crime.

He said there was need to give more teeth to the Appellate Authority by
providing even persons qualified to be judges to sit on the bench.